COMMERCIAL BANKS

AND INVESTMENT
BANKS
COMMERCIAL BANKS
 is a financial institution that provides services
like loans, certificates of deposits, savings bank
accounts bank overdrafts, etc. to its customers.
These institutions make money by lending loans
to individuals and earning interest on loans.
FUNCTION OF COMMERCIAL BANKS
 Commercial banks provide basic banking services and products to the general public, both
individual consumers and small to midsize businesses. These services include checking and savings
accounts; loans and mortgages; basic investment services such as CDs; and other services such as
safe deposit boxes.
 The main purpose of commercial banks is to provide financial services to the general public and
also provide loan facilities to the business which helps in ensuring economic stability and growth of
the economy.

IMPORTANCE OF COMMERCIAL BANKS IN THE ECONOMY

 Commercial banks are an important part of the economy. They not only provide consumers with an
essential service but also help create capital and liquidity in the market.
 TYPES OF COMMERCIAL BANK

Public Bank - is a bank, a financial institution, in which a state,

municipality, or public actors are the owners. It is an enterprise under
government control.

Private Sector Banks -are financial institutions that are owned and
operated by private individuals or corporations, rather than the
Commercial Bank government.

Foreign Banks –The banks with their headquarters in foreign countries

and branches in our country, fall under this type of bank.
EXAMPLES:

PUBLIC BANK PRIVATE BANK FOREIGN BANK

COMMERCIAL BANK IN THE PHILIPPINES
 Commercial banks in the Philippines provide convenient financial solutions to both
consumers and small businesses. With a commercial bank, you can deposit your money
for safekeeping. You can also get credit cards, insurance, and loans for your needs.
 Some top commercial bank (on the basis of available assets) in the Philippines are:
• Metropolitan Bank and Trust
• Land Bank of the Philippines
• BDO Unibank
• Bank of the Philippine Islands
 INVESTMENT BANKS
 A financial services company
that acts as an intermediary in
large and complex financial transaction.
Investment bank clients include corporations,
Governments, pension funds, and hedge funds.

FUNCTIONS OF INVESTMENT BANKS

Underwriting new
stock issues
Mergers and
Investment Banks Acquisition
Financial Advisory
GOAL OF INVESTMENT BANKS
 Advise businesses and governments on how to meet their financial challenges and to help
them procure financing, whether it be from stock offerings, bond issues, or derivative
products.

IMPORTANCE OF INVESTMENT BANKS

Helps broader financial markets and the economy by matching sellers and investors,
therefore adding liquidity to markets.
The actions of the banks also make financial development more efficient and promote
business growth, which in turn helps the economy.
CHINESE WALL
 is a business term used to describe a virtual barrier erected to block the exchange of information between
departments in a company.

TWO SIDES OF INVESTMENT BANK

Buy-side Sell-side

Liquidity M&A
Money
Management Buy-hold-sell Selling
Services Decisions Securities shares of
for cash IPOs
TYPES OF INVESTMENT BANKING ACTIVITIES

Front Office Middle Office Back office

Involve direct Are far from the trading

Are situated between
interaction with the investment bank’s client- floors of the investment
public. facing activities and its banks.
more behind-the-scenes
work.

Research Settlements

Payment Processing
Sales and trading
Compliance
Technology Support
Mergers and
Acquisition Risk Management Human Resources
TYPES OF INVESTMENT BANKS
1. Boutique Bank-a small financial firm offering specialized and personalized investment management,
banking, or niche financial services.

a.) Regional Boutique Bank- the smallest of the investment bank,

both in terms of firm size and typical deal size.
b.) Elite Boutique Bank- often handle large deals. example: Evercore Group LLC
2. Middle-market Banks- sit between the Regional Boutique Bank and Bulge Bracket
Bank. Example: Piper Sandler Companies
3. Bulge Bracket Banks- are the largest investment banks, both in terms of deal size
and operations. Example: Goldman Sachs
 INVESTMENT BANKS IN THE PHILIPPINES
1. AB Capital and Investment Corp. 21. Philippine Regional Investment Development Corp.
2. Abacus Capital & Investment Corp. 22. PNB Capital and Investment Corp.
3. Amalgamated Investment Bancorp. 23. Premiere Capital Venture Corp.
4. Ampersand Capital 24. RCBC Capital Corp
5. Asian Alliance Investment Corp. 25. SB Capital Investment Corp.
6. BA Investments and Holdings, Inc. 26. State Investment Trust, Inc.
7. BDO Capital & Investment Corp. 27. UBS Investments Philippines, Inc.
8. BPI Capital Corp. 28. Unicapital, Inc.
9. China Bank Capital Corp.
10. CIMB Bancom Capital Corp.
11. Citicorp Capital Philippines, Inc.
12. CLSA Exchange Capital, Inc.
13. First Metro Investment Corp.
14. Insular Investment Corp.
15. Investment & Capital Corp. of the Philippines
16. Maybank ATR Kim Eng Capital Partners, Inc.
17. Multinational Investment Bancorp.
18. PBC Capital Investment Corp.
19. PentaCapital Investment Corp.
20. Philippine Commercial Capital, Inc
 COMMERCIAL BANK VS. INVESTMENT BANK

COMMERCIAL BANK INVESTMENT BANK

Clientele Small and medium sized Investors, corporations,
business government
Primary Services Loans, mortgage loans, deposit Assisting institutional investors
accounts for small and medium and corporations with financial
businesses needs
Other Services Mobile banking, credit cards, Wealth and asset management,
M&A services broker services, financial
advisory services
Profits From fees for services provided From fees on services
and interest
QUESTIONS AND ANSWERS:
1. A financial institution that provides services like loans, certificates of deposits, savings
bank accounts bank overdrafts, etc. to its customers.
Answer: Commercial Bank

2. A financial services company that acts as an intermediary in large and complex financial
transaction.
Answer: Investment Bank

3. A business term used to describe a virtual barrier erected to block the exchange of
information between departments in a company.
Answer: Chinese Wall